Mercedes-Benz plans Rs 250 cr investment at Pune plant

German automobile manufacturer Mercedes-Benz on Wednesday said it plans to increase investment in India to Rs 850 crore by 2014.

The company, which has already spent in excess of Rs 600 crore, plans to invest another Rs 250 crore in its Chakan facility near Pune for local production of a range of products, including sports utility vehicle (SUV) M-Class.

The company, which has already spent in excess of Rs 600 crore, plans to invest another Rs 250 crore in its Chakan facility near Pune for local production of a range of products

"The investment will help strengthen production and operational capabilities of existing products, and of our exciting and aggressive product (new) offensive, which we are readying for the Indian market," said Peter T. Honegg, managing director and chief executive, Mercedes-Benz India.

According to the company, the investments will be completed by 2014 for local manufacturing of M-Class.

The India manufacturing would be among the first productions outside Mercedes' parent, Daimler's mother SUV plant in Alabama, USA.

Mercedes has, however, fallen behind rivals BMW and Audi in terms of sales, as the other two companies have introduced aggressively priced products.

Sales of Mercedes-Benz's cars fell to 1,257 cars behind Audi's 1,908 cars sold during April to June 2012. BMW stayed in the lead with 2,088 units sold.

Currently, the company manufacturers sedans like C-Class, E-Class and S-Class in its Chakan plant. The company plans to produce cars locally to beat rivals in terms of price.

"Mercedes-Benz India's aggressive growth plan includes the local manufacturing of several new models in the coming years, beginning with the new M-Class," said Piyush Arora, director (technical), Mercedes-Benz India.

The company added that its new paint shop at Chakan would be operational by October 2012. It will have a production capacity of 20,000 units annually, which can be scaled up to 40,000 units. The company currently has a network of 72 sales outlets across 31 cities.